Amazon stumps up nearly $US14B for Whole Foods Market

Amazon has agreed to pay $42 per share in cash for Whole Foods, a 27% premium on the Austin, Texas-based grocer's closing share price on Thursday.

Amazon is making a bold expansion into physical stores with the $13.7 billion deal to buy Whole Foods, setting the stage for radical retail experiments that could revolutionize how people buy groceries and everything else.

"They (Amazon) always try to offer the best price, which is good for the customer, but not good for the brand", Motkin said. It also had been facing increased pressure from rivals, including European grocery chain Lidl, which is planning to enter the East Coast market, along with Aldi and Trader Joe's.

Whole Foods has hundreds of locations all over the country.

Shares in many of Amazon and Whole Foods' competitors were down in trading today, as investors contemplated the potential ramifications from the tie-up. And Walmart shares dropped more than 6 percent to $74.23 a share.

News of the deal sent shares of traditional retailers such as Walmart, Target, Costco and Kroger tumbling as much as 13 per cent as investors tried to digest the implications of an Amazon-backed grocery chain.

Some say online grocery shopping will never work.

At least for the time being, Whole Foods' retail stores will continue to operate under the same brand name, there won't be any immediately noticeable differences for shoppers, and there are no plans to lay off Whole Foods workers, either.

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"This will definitely make the market more competitive", she added.

"The conventional grocery store should feel threatened and incapable of responding", Pachter said. Target tumbled by 10 percent and Walmart was down by 6 percent.

In October, reports surfaced that Amazon was planning to build its own grocery stores. It announced Friday that it's buying online men's clothing retailer Bonobos for $310 million, following a string of online acquisitions including ModCloth and Moosejaw. With a focus on "last mile" delivery of fresh foods, Instacart could certainly complement Amazon's existing services. Whole Foods Market, which has more than 420 stores in more than 40 states in the USA, soared more than 29.1 percent to $42.68.

- Supervalu. The grocery store operator lost 54 cents, or 14.4 percent, to $3.22.

"The ramifications for all of retail are seismic - not just retailers that sell grocery, but for everyone", Chuck Grom of Gordon Haskett said. Firstly, don't forget that Whole Foods is a pretty trendy and high-end outlet with an organic focus. It now delivers fresh food on demand and opening test stores in Seattle. It was recently granted a patent for technology that would block shoppers from comparing prices using their mobile devices while they are in stores. He's got professional respect for Amazon for how efficiently and successfully it runs its business. And the key measure that retailers look at to gauge their health, revenue at stores open more than a year, has fallen for seven quarters in a row. Earlier this week rumors were swelling that Amazon had its sights on acquiring messaging technology company Slack, turns out it was Whole Foods that would be first.

A Whole Food Market is shown in Indianapolis, Friday, June 16, 2017.

John Mackey will remain CEO of the company.

Some speculated that the stock rose above $42 in anticipation that another buyer could emerge to challenge Amazon, potentially kicking off a bidding war for the 37-year-old grocery chain.

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